A fascinating new study published in the December issue of the Harvard Business Review delves into how customer satisfaction relates to customer retention. In an article entitled The New Science of Customer Emotions, authors Scott Magids, Alan Zorfas and Daniel Leemon delve deeply into a fact that Gallup identified years ago: satisfaction is not enough to retain customers – it takes a “wow” relationship to forge customers who are not only loyal, but who become brand advocates.
Magids and Zorfas are the Founder and Chief Researcher, respectively, for Motista, a consumer intelligence firm; Leemon is the Lead Director of CEB, a best-practice insight and technology company.
The report looks at which emotional drivers yield the sort of loyalty and commitment that encourages consumers to spend more with a company, worry less about price and feel more compelled to share their enthusiasm with others. The study found wide gaps between feeling that a company is a good brand and feeling an emotional connection, finding many that are considered good brands don’t necessarily have high emotional connection scores.
The companies whose brand satisfaction and emotional connection scores were the closest? BMW, Virgin Airlines and Charles Schwab. Most other brands highlighted – including Starbucks – had wide gaps between the two scores. The authors provide considerable support for the economic value of having highly “connected” customers, and suggest that companies with a large gap between acceptance and connection have a significant opportunity to improve sales and profitability. Also, highly connected customers spend anywhere from 23% to 100% more than unconnected customers, depending on the product category. The authors found that emotional connectivity could affect purchases of products as run-of-the-mill as household cleaners.
The report goes beyond pointing out the economic benefits, providing some practical prescriptions for fostering connected customers. While their work has identified hundreds of potential drivers of connection, the authors note that organizations should at least appeal to the top “motivators” of connected customers:
- Stand out from the crowd
- Have confidence the future
- Enjoy a sense of well-being
- Feel a sense of freedom
- Feel a sense of thrill
- Feel a sense of belonging
- Protect the environment
- Be the person I want to be
- Feel secure
This all makes sense so far, until the authors proceed to their main prescriptions. After highlighting the importance of an emotional connection, none of their solutions explicitly have anything directly to do with people other than the leadership of the company. While engaged and trained employees can have a major impact on the above motivators, the authors don’t even mention the role employees can play in helping to address the key drivers of emotional connection. This was particularly evident in the example they offer of a “major” retailer for whom they provided consulting services. Their prescriptions include:
1. Target people who are “connected” with your business category. In the case of this retailer, the authors found that only a percentage of customers are emotionally connected with fashion; the first place to start in marketing is to find those consumers already connected with a category. Among other recommendations, they suggested that the retailer could benefit by locating its stores in areas with higher concentrations of consumers emotionally connected with fashion.
2. Identify the key drivers of your customer base. In other words, which of the above drivers (or others) will help create emotionally connected customers in your market? They note that “those motivators therefore became the focus of specific customer-experience investments.” Customer experience? Doesn’t that have something to do with employees? The authors are silent on the matter.
3. Optimize investments across functions. The authors write: “To maximize opportunities from emotional connection, companies must look beyond the marketing department. The retailer examined every function and customer touchpoint to find ways to enhance high-ROI emotional motivators. This brought four major investment areas into focus: stores, online and omni-channel experiences, merchandising, and message targeting.” Again, not one mention of the role of employees.
4. Systematize, measure, and learn. The authors suggest making emotional connection “a key performance indicator and including it on the cross-functional senior-management dashboard.” They say that the retailer scorecard in their example “gives the CEO and the executive team a single-page view of customers’ progression on the emotional-connection pathway, along with the increase or decrease in connected customers of the company and its key competitors.” Again, the authors completely overlook probably over 100 studies indicating the role of employees in creating an emotional connection with customers, including the Harvard Business Review’s own 2005 cover story, Manage Your Human Sigma, which identified the link between employee and customer engagement, and a more recent article on leadership, Connect Then Lead, which identified “warmth” as a key element to making effective connections. The recent case study on Northwell Health, a major health care provider in the New York City area, provides a compelling example of the role employees play in connecting with customers.
The authors assert that addressing emotional connectivity is a management imperative: “Embracing an emotional-connection strategy across the organization requires deep customer insights, analytical capabilities and, above all, a managerial commitment to align the organization with the new way of thinking…Marketing must partner with other functions, teaching and socializing emotional connection. The retailer we profiled now uses emotional connection to drive alignment across the operations management team, the C-suite and the boardroom. At the outset the CEO identified emotional connection as a strategy to restore profitable growth. The CFO and the Chief Strategy Officer then ‘sized the financial prize,’ leading the heads of marketing, stores, customer experience and merchandising, to collaborate on an integrated strategy.”
Where do human resources or employees fit into this equation?
This exciting study is yet another example of the amount of time and money wasted because of the simple fact that nobody is schooled in the emerging field of engagement. These otherwise highly qualified authors did their client a disservice if they didn’t strategically address the employee role in their recommendations, and they most definitely did Harvard Business Review readers a disservice by overlooking the simple fact that people make emotional connections, not policies and systems.